'Fast Money' Recap: Playing Microsoft's Bid for Yahoo!

The panel takes an overall positive view of the prospect that Microsoft may lower its bid.
Author:
Publish date:

The U.S. stock market finished the week with mixed results Friday. The Dow was down 0.1% for the day, while the S&P 500 rose 0.1% and the Nasdaq climbed 0.3%

After the close,

Microsoft

(MSFT) - Get Report

threatened to lower its bid for

Yahoo!

(YHOO)

.

On

CNBC's

"Fast Money" TV show, Jeff Macke said he owns both stocks, so he doesn't see the move as all bad. He said that Yahoo! shouldn't expect to get a higher bid. Karen Finerman said Microsoft was taking a page out of the Larry Ellison playbook by making a hostile bid on a defenseless company, letting it pursue alternatives and then threatening a lower bid. She said Yahoo! CEO Jerry Yang needs to negotiate, because a delay in the deal serves nobody.

Pete Najarian disagreed. He said that sellers of Yahoo! calls are making money, because a $40 billion deal doesn't happen overnight. He said the price is likely to bring in money. Sell calls, he said.

3 Stocks I Saw on TV

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1493215298; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

Finerman said she may buy Yahoo! calls Monday, but she said she doesn't know where the stock's bottom is if Microsoft pulls the bid. On the other hand, she said, Microsoft won't pull the bid lightly, because it has declared it needs help in the Internet space.

Macke said he'd buy Microsoft on this news, but Yahoo! scares him right now.

The traders noted that the stock market had its best week in two months, and the rally was led by financials.

Merrill Lynch

(MER)

,

Fannie Mae

,

Citigroup

(C) - Get Report

,

Lehman Brothers

(LEH)

and

NYSE Euronext

(NYX)

all posted double-digit gains this week.

Finerman said it's interesting that all those financials were up about the same amount without regard to fundamentals. She said she's a buyer of Fannie Mae calls because she expects a legislative push to help Fannie Mae and

Freddie Mac

.

Najarian said that it wouldn't be wise to jump into these names right now. It's not the right time, he said.

Adami said everyone's expecting earnings to be a disaster. He said that

Alcoa

(AA) - Get Report

could surprise people. He noted that the jobs numbers today didn't hurt the market the way it would have in the past several months. He said he thinks that negativity is priced in, and predicted that the next big move in the market will be higher. Najarian said he likes the market action but noted low volatility this week.

Macke said that Lehman Brothers is issuing somewhat "dicey" paper and that

UBS

(UBS) - Get Report

did a "passable imitation of a company that's blowing up." Because the stocks reacted well to this news, he said investors can't be short the financials here. It's very bullish price action, he said.

Najarian said the dollar doesn't look good here and noticed that all the metals were screaming along with coal. Adami said that

Burlington Northern Santa Fe

(BNI)

,

U.S. Steel

(X) - Get Report

and

Apache

(APA) - Get Report

all hit 52-week highs this week. He said he likes all those names.

Dennis Gartman, author of

The Gartman Letter

, joined the show to further discuss commodities. He called stock price action impressive, and said he wants to own things that "hurt if you drop them on your foot." That means steel, railroads and coal.

Gartman said the infrastructure play is still intact. He said the market is not going down on bearish news and is going higher on any good news. He noted that stocks are not giving back their gains, and so he believes investors can be long the

S&P 500

. He recommended owning high-tech, copper and steel stocks.

A selloff in gold washed the public out, Gartman said. He said the dollar is still weak, and gold made a good showing this week. Oil turned higher, and as cash flows into the financial system, stocks are also feeling upward pressure, he said.

In the tech space,

Apple

(AAPL) - Get Report

staged an impressive rally this week. Najarian said that he believes the stock is in the middle of its upward move. He predicted higher earnings for the company going forward.

Macke said he likes Apple but prefers

Research In Motion

(RIMM)

. Still, he said, Apple "plays the market like a fiddle."

On strength in the semiconductor sector, Najarian predicted bullish action for

Sandisk

(SNDK)

. Adami said that despite recession fears, semiconductors have inventories under control, which he said is a good sign.

Macke said that he's not that excited about the broader economy.

Intel's

(INTC) - Get Report

move to $22.50 doesn't mean everything's good in general, he said. However, he said he believes the upward move in the sector is a rational reaction, and he likes the space because it's not ahead of itself.

Noting bullish action in the agriculture sector, the traders pointed out that

Mosaic

(MOS) - Get Report

rocketed higher this week. Najarian said there's more to the upside in the space. He said

Monsanto

(MON)

looks phenomenal. He also noted that

Potash

(POT)

has pricing power. Look at

Massey

(MEE)

,

Alpha Natural Resources

(ANR)

and

Walter Industries

(WLT)

, he advised.

The traders featured their best trades of the week. Finerman had picked

Tesoro

(TSO)

and

Valero

(VLO) - Get Report

, each of which were up 6% since her call. Macke had recommended RIM, which popped 8% on earnings. Najarian had suggested

Hercules Offshore

(HERO)

, which climbed 15% in a week. Adami's

Home Depot

(HD) - Get Report

call preceded a 10% jump in share price.

Finerman said it's interesting that as the consumer feels pressure,

Wal-Mart

(WMT) - Get Report

is performing very well. Everyone knows March was a terrible month for the retailer, she said. She said she wouldn't expand her position on Monday and she's been selling into the rally.

Macke said Wal-Mart's quarter is going to be ugly.

J.C. Penney

(JCP) - Get Report

already reported, he said, and that is how investors know to be wary. He noted that estimates call for a 2% same-store sales decrease. He said to buy the stock on dips and advised against chasing.

Adami said he thinks Home Depot is fine and is cheaper on a valuation basis than

Lowe's

(LOW) - Get Report

. Finerman said she owns Home Depot. Najarian said he prefers Lowe's.

Najarian pointed out heavy options activity in

Allegheny Technology

(ATI) - Get Report

,

Evergreen Solar

(ESLR)

and

Petrohawk

(HK)

.

Najarian said Allegheny is beaten up. Adami agreed, saying that the company specializes in titanium and nickel. It could be a takeover play, he said, and he predicted a bottom in the stock.

Najarian said that Evergreen Solar has been lagging other names in the space, and call activity has been extremely active. He noted possible legislation offering tax credits for solar companies as a potential catalyst. Macke said that as the U.S. rotates out of ethanol, the next "energy boondoggle" will likely be in solar.

Petrohawk operates in the same world as

Chesapeake Energy

(CHK) - Get Report

and Apache, Najarian said. He likes both names.

The crew spoke with Tim Seymour about a possible Mexico trade. Seymour said that Mexico's market is rallying thanks both to fundamental and technical factors. He pointed out that there will likely be about at 1% increase in investing in the equities market there. He said that Mexico has priced in the U.S. recession before the U.S. A drop for

Cemex

(CX) - Get Report

is likely a buying opportunity, he said.

He also recommended

Homex

(HXM)

,

Empresas

(ICA)

and

America Movil

(AMX) - Get Report

.

Najarian cautioned viewers that 50% of the

iShares MSCI Mexico Index

(EWW) - Get Report

ETF is in three stocks.

Trader Radar

Vodafone

(VOD) - Get Report

shares were among the most active on the

NYSE

.

Fast Fire

Macke had recommended selling the automakers. This week,

General Motors

(GM) - Get Report

climbed 10%. He said the pop is an outstanding opportunity to sell.

Najarian recommended

Omnivision

(OVT)

, which didn't perform well. He said he's holding the stock.

Finerman had advised against getting into

CIT

(CIT) - Get Report

, shares of which jumped 18% since. She said she still doesn't like the company's decision to create a new business model.

Fast Money Madness

In the Final Four stage of the "Fast Money" tournament,

Goldman Sachs

(GS) - Get Report

defeated

Freeport-McMoRan

(FCX) - Get Report

and Microsoft vanquished

Altria

(MO) - Get Report

.

Final Trade

Macke selected Microsoft. Adami chose

Merck

(MRK) - Get Report

. Finerman cheered the

UCLA basketball team

. Najarian picked

Energy Conversion Devices

(ENER)

.